>>> Street Pre- Market Indications

CS
ABB +1-2% ABB will sell its HV Cables division to NKT
Autoliv -1% Takata said to receive five bids, with AUTOLIV among them
Banks +2% BoJ did not cut rates, Japanese banks +7%
Eurofin +2-3% Company raises 16 revs 2.9bln vs con s 2.76bln
Imp Tobac -1-2% CS D/G to N - Difficult to see revenue growth
Inditex +1% H1 sales beat, net better, margin inline
Oils +2% Crude +1% overnight after API showing supply drop
Miners M/P US miners flat, Rebar -70bps, Shcomp +15bps
RBS unch Santander Ends Talks With RBS to Buy Williams & Glyn (FT)
Saga +2-3% Quality beat, no brexit impact, guidance solid
Santander +2-3% Ends Talks With RBS to Buy Williams & Glyn (FT)
Swisscom +0.5-1% Says Guidance Unchanged Despite Drop in Swiss Business

COMMERZ
BAYN +0.6% Monsanto termination fee under Bayer merger agreement $1.85bn
DPW +1.1% Fedex Q1 beat, outlook solid at the EPS level, however x-read limited
EVT +3.6% And Bayer partner to develop treatments for kidney diseases
JEN -3.4% CEO Michael Mertin won’t extend contract beyond 2017
UN01 –0.3% Investec starts with Buy – PT €12
SAP +0.4% Adobe's Q3 + incr Q4 EPS guid slightly above cons; we see ltd x-read
SEN +1.8% MS raises to Overweight (Equalweight) – PT €18
SWVK –4.4% Oddo Seydler cuts to Neutral – PT €5
SY1 +0.3% Expands board; Jean-Yves Parisot to head Diana/Nutrition
SZU +0.8% Nestle seeks €50m from sugar companies on price fixing
VOW3 +0.8% Truck unit to expand global presence after Navistar deal

RBC
*ABB: +1% selling cables business to NKT Cables for €836M enterprise value.
*ACCOR: 0% REUTERS article negative on French hotel bookings for Aug.
*AMERISUR: +3% expected to spend $52M in capex, 2017 guidance increased substantially.
*DASSAULT: +2% positive read from ADOBE (+5.15%) after hours on earnings.
*DBK: 0% underperform on HOENIG data, leverage ratio weak.
*DIAGEO: +2% trading update, confident achieving mid-single digit top line growth.
*DPW: +2% positive read from FEDEX (+3%) after hours on strong numbers.
*IMAGINATION: -1% concerns on iPhone 7 glitches, Asia suppliers underperform.
*INDITEX: +2% H1 sales impressive 11% v 8.7% consensus, sales & gross margin better.
*METSO: 0% to consolidate US Pennsylvania locations to one facility at York.
*SPH: 0% H1 revenue in line, on track to meet 40% FY sales growth guidance.
*TDC: +2% PRESS reports company hires JPM & MS in defence of APOLLO bid.

MAINFIRST:
*NESTLE-Seeks €50m from sugar co's on price fixing-Susddeutsche.....+0.25%
*INDITEX-Ebitda 2.11b(2.12),Sales 10.47b(10.4),Net 1.26b(1.24)......+1%
*BSCH-Ends talks with RBS to buy Williams & Glyn - FT...............U/C
*VIVENDI-CEO says intention isn't to launch Telecom Italia t/o......U/C
*BAER-Adding headcount in HK,Singapore in a big way,Acq's China.....+0.25%
*SEMPERIT-Says 2016 results will be well below results in 2015......-10%
*ENI-Delays plans for sale of domestic retail bizz worth $3.4b......-1%
*ALTICE-Said to delay SFR stake purchase by about two weeks.........-0.5%
*AUTOLIV-Along with others have bid for Takata(air bags)............U/C
*EUROFINS-Raises '16 pft objectives,FY Adj Ebitda 480m(460m prev)...+3%
*ZURICH INS-Combines Corporate & Commercial Ins into new unit.......+0.5%
*DEUT POST-Read across from FedEx stock +2.9% a/hrs,strong Q1.......+1%
*ABB-Sells Cable Bizz to NRT Cables for €836m ent.value,clse Q1.....+0.5%

>>> What to look at today - 21st of September 2016

- BOJ policy review acknowledges its policy has not produced inflation rate recovery to 2% target, in part due to low energy prices; Maintains Japan is no longer in deflation.
- Discontinues monetary base expansion target framework in favor of "QQE with Yield Control" whereby short-term rate for IOER maintained at -0.1% and long-term targets 10-yr around zero through JGB purchases.
- Maintains ETFs and J-REITS purchases, includes Topix index ETF buying.
- Commits to make further policy adjustments with view of maintaining momentum toward achieving 2% inflation target.
- Would consider additional easing tools - cutting interest rates further, expanding asset purchases, and accelerating monetary base expansion.
- Reiterates all economic views; Overall assessment is "Japan continued moderate recovery trend."

Nikkei +1.69% Hang Seng +0.79% CSI +0.32% Shanghai +0.24%

Eur$ 1.1131 CNH 6.6817 CNY 6.6718 JPY 102.58 GBP 1.2973 CHF 0.9811 RUB$ 64.6706 WTI $44.88 (+1.88%)

S&P +0.47% EuroStoxx +0.81% Dax +0.60% SMI +0.30% FTSE +0.20%

Macro :
- Irish GDP Growth Next Year May Be Impacted by Brexit: Murphy
- Bank of Japan to Introduce QQE With Yield Curve Control
- EC Competition Official Says No New Wave of Tax Probes: Reuters
- Barclays Upgraded as Investors Are Too Pessimistic, HSBC Says

Keep an eye on :
- ALIV SS : Takata Said to Receive Five Bids With KKR, Autoliv Among Suitors
- ATC NA : Altice Said to Delay SFR Stake Purchase by About Two Weeks
- AAPL US : Apple’s Cost to Make IPhone 7 $224.80 Incl $5 Basic Costs: IHS
- BAYN GY : Monsanto Termination Fee Under Bayer Merger Agreement $1.85b
- BAYN GY : Bayer, Evotec in Pact to Develop Treatments for Kidney Diseases
- BLT LN : BHP CFO Says Iron Ore Royalty Plan Would Risk Mine Investment, BHP Billiton Says Paid $3.7b in Tax Globally in FY16
- BPI PL : Banco BPI Offers to Give Up Majority Control in Angola’s BFA
- AM FP : India Said Close to Announcing 8b Euro Rafale Fighter Jet Deal
- DBHN GY : Deutsche Bahn Drops Plan to Sell Part of Arriva: Handelsblatt
- DB1 GY : Euronext CEO Criticizes Merger Plan Deutsche Boerse, LSE: FAZ
- ERF FP : Eurofins Raises 2016 Profit Target, Sets Preliminary 2017 Goals
- GTO NA : VeriFone Faces ‘Dramatic’ Slowdown in N.A. Sales: Morgan Stanley
- ITX SM : Inditex 1H Ebitda EU2.11B; Est. EU2.1B
- ING FP : VeriFone Faces ‘Dramatic’ Slowdown in N.A. Sales: Morgan Stanley
- ISP IM : Intesa in Talks to Buy ITB for Up to EU180m, Sole Reports
- MAERSKB DC : Maersk Rating Cut, Estimates Lowered After Weak 2Q: Barclays
- NESN VX : Nestle Seeks EU50m From Sugar Co’s on Price Fixing: Sueddeutsche
- RNO FP : Renault to Start Talks With French Unions on Labor Agreement
- SDRL NO : Transocean, Seadrill Among Most Exposed to Petrobras: Barclays
- SHP LN : Shire Isn’t Looking for More Dyax-Sized Deals in ‘Near Term’
- SCMN VX : Swisscom Says Guidance Unchanged Despite Drop in Swiss Business
- TALK LN : mentionned as potential target by Redburn, predator could be O2 or Three, as a reverse Takeover - Telegraph
- UBI FP : Ubisoft Selling About EU400m in Bonds by Private Placement
- VIV FP : Vivendi’s Latin Development Not Dependent on Mediaset, CEO Says
- VIV FP : Vivendi Aims to Take Every Opportunity in Game Industry: CEO

>>> Europe : Brokers Upgrades & Downgrades - 21st of September 2016

>>> Up
*ANGLO AMERICAN RAISED TO EQUALWEIGHT VS UNDERWEIGHT AT BARCLAYS
*BARCLAYS RAISED TO BUY AT HSBC
*KAZ MINERALS RAISED TO EQUALWEIGHT VS UNDERWEIGHT AT BARCLAYS
*NATIONAL STORAGE AFFILIA RAISED TO BUY AT JEFFERIES
*SENVION RAISED TO OVERWEIGHT VS EQUALWEIGHT AT MORGAN STANLEY
*SOUTH32 RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*TEMENOS RAISED TO NEUTRAL VS SELL AT GOLDMAN
*TRANSUNION RAISED TO OVERWEIGHT AT BARCLAYS

>>> Down
*AP MOLLER MAERSK CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS
*CLARIANT CUT TO NEUTRAL VS BUY AT CITI
*FAIR ISAAC CUT TO EQUALWEIGHT AT BARCLAYS
*GEM DIAMONDS CUT TO UNDERWEIGHT VS OVERWEIGHT AT BARCLAYS
*GLENCORE CUT TO UNDERWEIGHT VS EQUALWEIGHT AT MORGAN STANLEY
*HESKA CUT TO NEUTRAL AT B. RILEY
*HOCHSCHILD MINING CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS
*IMPERIAL BRANDS CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE
*JENOPTIK CUT TO ’HOLD’ AT BAADER-HELVEA
*OCADO CUT TO SELL VS HOLD AT DEUTSCHE BANK
*RELX GROUP CUT TO UNDERPERFORM VS NEUTRAL AT MACQUARIE

>>> PT Change


>>> Initiation
*AMIRA NATURE FOODS RATED NEW BUY AT JEFFERIES
*FAURECIA RATED NEW ’NEUTRAL’ AT MAIN FIRST BANK AG
*FIRSTGROUP RATED NEW SELL AT DEUTSCHE BANK; PT 94P
*GO-AHEAD RATED NEW BUY AT DEUTSCHE BANK; PT 2,330P
*H-FARM RATED NEW OUTPERFORM AT MEDIOBANCA; PT EU1.05
*MICHELIN RATED NEW ’OUTPERFORM’ AT MAIN FIRST BANK AG
*NATIONAL EXPRESS RATED NEW HOLD AT DEUTSCHE BANK; PT 365P
*PHOENIX RATED HOLD AT HSBC, PT 920P; WAS RESTRICTED
*VALEO RATED NEW ’OUTPERFORM’ AT MAIN FIRST BANK AG
*VESTAS RATED NEW EQUALWEIGHT AT MORGAN STANLEY, PT DKK580

>>> Call
>> Stock
*AMEC FOSTER WHEELER ADDED TO SOCGEN MID & SMALL CAPS LIST
*BARCLAYS ADDED TO HSBC EUROPE SUPER 10 PORTFOLIO; RENAULT EXITS
*CFE ADDED TO SOCGEN MID & SMALL CAPS PREMIUM LIST
*MERLIN PROPERTIES REMOVED FROM SOCGEN MID & SMALL CAPS LIST
*MONCLER ADDED TO SOCGEN MID & SMALL CAPS PREMIUM LIST
*PLASTIC OMNIUM REMOVED FROM SOCGEN MID & SMALL CAPS LIST
*WERELDHAVE ADDED TO SOCGEN MID & SMALL CAPS PREMIUM LIST

>>> Asian Update

Asia Mid-Session Market Update: BOJ scraps monetary base framework in favor of "

***BOJ Decision Observations***
- BOJ policy review acknowledges its policy has not produced inflation rate recovery to 2% target, in part due to low energy prices; Maintains Japan is no longer in deflation.
- Discontinues monetary base expansion target framework in favor of "QQE with Yield Control" whereby short-term rate for IOER maintained at -0.1% and long-term targets 10-yr around zero through JGB purchases.
- Maintains ETFs and J-REITS purchases, includes Topix index ETF buying.
- Commits to make further policy adjustments with view of maintaining momentum toward achieving 2% inflation target.
- Would consider additional easing tools - cutting interest rates further, expanding asset purchases, and accelerating monetary base expansion.
- Reiterates all economic views; Overall assessment is "Japan continued moderate recovery trend."

***Top US session headlines***
- (US) AUG HOUSING STARTS: 1.14M V 1.19ME; BUILDING PERMITS: 1.14M V 1.17ME; most pronounced dip in Southern housing market
- OPEC Sec Gen Barkindo reportedly confident an accord will be made at Algiers meeting on Sept 28th
- (RU) Russian govt official: Russia supports the idea of a 1-year agreement on oil stabilization - Russia press
- (CA) Bank of Canada (BOC) Gov Poloz: need stimulative monetary policy to counteract strong headwinds in economy

***US markets on close: Dow +0.1%, S&P500 flat, Nasdaq +0.1%***
- Best Sector in S&P500: Healthcare (Biotech)
- Worst Sector in S&P500: Basic Materials
- Biggest gainers: RCL +4.5%, GILD +3.5%, SWN +2.8%, HOT +2.4%, MAR +2.3%
- Biggest losers: URI -4.6%, TGNA -3.8%, CHK -3.7%, LEN -3.5%, AYI -3.5%

***VIX 15.92 (+0.39pts); Treasuries: 2-yr 0.78% (flat), 10-yr 1.69% (-1bp), 30-yr 2.43% (-1bp)***

***US movers afterhours***
- ADMS +7.7%; EASE LID 3, a Pivotal Trial of ADS-5102 for treatment of Levodopa-induced Dyskinesia (LID) in Parkinsons Disease patients meets primary endpoint
- ADBE +5.1%; Reports Q3 $0.75 v $0.72e, R$1.46B v $1.45Be; Guides Q4 $0.83-0.89 v $0.77e, R$1.55-1.60B v $1.58Be; Confirms raising FY16 to EPS $2.94-3.00 v $2.85e, Rev $5.80-5.85B v $5.81Be
- CPRT +4.1%: Reports Q4 $0.59 v $0.54e, R$333M v $318Me
- NUS +3.6%; Reaches resolution with SEC, agrees to pay $766K; adjusts Q3 Rev 'to the high end or slightly above' $560-580M v $578Me (prior $560-680M) - filing
- FDX +3.0%; Reports Q1 $2.90 v $2.79e, R$14.7B v $14.4Be; Raises FY17 $11.85-12.35 (Excluding TNT Express integration, Outlook restructuring program costs and TNT Express intangible asset amortization) v $11.89e (prior $11.75-12.25)
- KBH +2.5%; Reports Q3 $0.42 v $0.39e, R$913.3M v $954Me
- MSFT +1.1%; Raises dividend 8% to $0.39 from $0.36 (indicated yield 2.74%); authorizes up to $40B in share repurchases (9% of market cap)
- MIRN -27.1%; Halts Phase 1 Clinical Study of MRX34
- MSTX -83.4%; Reports top-line results from Phase 3 study in sickle cell disease; study did not meet primary endpoint

***Equity Futures (01:0ET): S&P e-mini +0.4%, Dax +0.4% FTSE100 +0.5%***

***FX / Commodities (01:0ET): ***
- EUR falls 30pips to 1.1125; USD/JPY rises about 100pips to 102.70; AUD 0.7540-0.7570, NZD 0.7285-0.7315
- Gold -0.3% at 1315; Oil +1.8% at $44.82/brl; Copper -0.4% at $2.18/lb

**** Asian Equity Markets (01:0ET) ****
- Nikkei +1.3%, Hang Seng +0.6%, ASX +0.7%, Shanghai flat, Kospi +0.2%

***Key economic data: ***
- (JP) JAPAN AUG TRADE BALANCE: -¥18.7B (3-month low) V +¥191BE; ADJ TRADE BALANCE: ¥340B (4-month high) V ¥494BE; Exports Y/Y: -9.6% v -4.7%e; 11th consecutive decline; Imports Y/Y: -17.3% v -16.6%e; 20th consecutive decline
- (AU) AUSTRALIA AUG SKILLED VACANCIES M/M: -0.4% V -0.3% PRIOR
- (AU) AUSTRALIA AUG WESTPAC LEADING INDEX M/M: 0.0% V +0.1% PRIOR

***Fixed Income / Speakers / Press / Key Themes***
China:
- (CN) China Banking Regulatory Commission (CBRC) President Fulin: Needs to stress test real estate loans - Chinese press
- (CN) PBOC to inject CNY120B in 7-day reverse repos and CNY80B in 28-day reverse repos
- (CN) China Premier Li: World trade is still sluggish 8-yrs after crisis; China is keeping stable growth amid weak global recovery; To restructure economy to sustain growth; To raise service portion in GDP by 4-5ppts per year.

Japan:
- (JP) Prices of Japan's commercial land has risen for the first time in 9 years; Avg increase was 0.005% as of July 1st; Residential prices were down 0.8% - Nikkei citing Ministry of Land, Infrastructure, Transport and Tourism
- JGB: (JP) Japan's top 3 megabanks traded about ¥1.7T in JGBs in August - record low and first time below ¥2T - as BOJ's QE program weighs on liquidity in the market - Nikkei

Australia / New Zealand:
- (AU) Australia MoF (AOFM) sells A$900M in 2.75% 2027 bonds; avg yield 2.1936%; bid-to-cover 3.11x
- (NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: +1.7% v +7.7% prior; 4th straight increase (**Below market forecast of +5-10%)
- (NZ) Fonterra: Raises FY16/17 milk price payout to NZ$5.25/kg from NZ$4.75/kg

***Asia movers***
- Consumer discretionary: Esprit Holdings 330.HK +3.3% (annual result); Kathmandu Holdings KMD.AU +0.4% (FY16 result)
- Consumer staples: Chaoda Modern Agriculture Holdings 682.HK -4.4% (profit warning)
- Industrials: Takata Corp 7312.JP -6.7% (receives 5 bids); Hanjin Shipping Co 117930.KR -17.9% (Korean Air considers aid options); Aurizon Holdings AZJ.AU +2.4% (Goldman Sachs raised to Neutral); Great Wall Motor 2333.HK -4.8% (Credit Suisse cuts to Neutral); Boral BLD.AU +1.7% (Macquarie raised to Outperform); Nufarm NUF.AU +5.4% (FY16 result)
- Technology: Sharp Corp 6753.JP +5.6% (said to raise TV sales target)
- Materials: Kobelco Eco-Solutions Co.6299.JP +1.8% (raises guidance); Adelaide Brighton ABC.AU +1.3% (Macquarie raised to Outperform)
- Energy: Infigen Energy IFN.AU +3.4% (added to ASX 200)
- Healthcare: Sumitomo Dainippon Pharma 4506.JP +2.7% (dasotraline meets endpoint); Bionomics BNO.AU +45.3% (Phase 2 trial meets primary endpoints)
- Telecom: TPG Telecom TPM.AU -6.4% (Morgans cuts to Reduce)

>>> BOJ - watch 102.65 on USD/JPY, a move sustain move above would be bullish

BOJ - watch 102.65 on USD/JPY, a move sustain move above would be bullish 

Good Morning,

 

Japanese Yield and USD/JPY are trading higher after BOJ did not cut rates further. For me this doesn’t come as a surprise as you all know I believe that low rates, especially the long end side of the curve must be higher and are doing more damage than good to the economy as a whole. The message from today decision is clear and it is that the rate cut cycles (especially the negative rates) are nearing their end and yield is nearing its lows. The BOJ decision is indicative of focus on steepening the yield curve focus, will be positive for banks and life insurers Companies.

 

Elsewhere – The USD and Yield is higher also vs the EUR. If the rate cut cycle is over for now the USD should benefit against EUR & JPY on the back of relative yield spreads and a potential rate increase by the Fed (if not later today than in December). The ‘Idea’ of buying US Treasuries on relative terms because other central banks are implementing negative rates and extending monetary easing is becoming a less obvious play. This is especially true when long term yield is trading in zero to negative nominal levels. For the FOMC decision tonight - I would use any dip in the US 10 Year yield towards 1.60 to short Treasury futures as I believe the US 10 Year yield is heading towards 2%.

 

Have a good day and good luck.

 

USD/JPY – all eyes at 102.65 level as a break above it would argue for a declining trend breakout and based on the weekly chart will also argue for a low in place.

 

Daily chart

 

Weekly chart

 

 

>>> US After Hours


After Hours Summary: ADBE +5%, KBH +4% following earnings/guidance, SPSC +6%, FOXF +3% and COO +1% on S&P index news, MSFT +1.2% on dividend/buyback news... MSTX -80% Ph 3 trial update

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: ADBE +4.7%, KBH +4.2%, AIRG +4.2%, NUS +3.6% (reaches resolution with the SEC, which fully resolves the previously disclosed SEC investigation in its entirety; sees Q3 revs at high end or above prior guidance), FDX +2.2%, CAFD +0.3% (also 8point3 Energy Partners LP to acquire Sunpower's 49% stake in its 102-MW Henrietta Solar Project for about $134 mln)

Companies trading higher in after hours in reaction to news: USEG +10.1% (thinly traded, entered into an Earnings & Participation Agreement on a previously announced project with IronHorse Resources), CLVS +8.2% (continued strength following today's M&A chatter), SPSC +5.6% (to join S&P SmallCap 600), ADMS +5% (announces results of EASE LID 3, says the improvement in LID was statistically significant and confirmed safety and efficacy data from earlier pivotal trials), FOXF +2.5% (light volume - to join S&P SmallCap 600), KITE +1.6% (enters an exclusive, worldwide license with the NIH for intellectual property related to multiple T-cell receptor based product candidates for the treatment of tumors expressing mutated KRAS antigens), MSFT +1.2% (dividend increased 8 percent; $40 billion authorized for share repurchase), COO +0.9% (to join the S&P 500), UPS +0.6% (following FDX earnings), CAFD +0.3% (8point3 Energy Partners LP to acquire 49% stake in 102-MW Henrietta Solar Project for about $134 mln), AGN +0.2% (Allergan acquires Akarna Therapeutics for an up-front payment of $50 mln)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: N/A

Companies trading lower in after hours in reaction to news: MSTX -79.7% (reports top-line results from Phase 3 study in sickle cell disease; study did not meet its primary efficacy endpoint; will hold a conference call tomorrow), MIRN -26.8% (to close the ongoing Phase 1 study of MRX34, its investigational microRNA therapy for multiple cancers), LEI -4.3% (ticking lower; files for 13,009,664 share common stock offering pursuant to the asset purchase agreement by selling stockholders), CDNA -3.5% (announces a proposed offering of common stock), COMM -0.9% (announces sale of 10 mln shares of common stock by affiliate of The Carlyle Group)